Bentonite: a swelling market

By Emma Hughes
Published: Monday, 26 November 2012

As the global recession loosens its grip on the world economy, IM considers how bentonite has weathered the storm, looking at its most important end markets and their economic drivers

Bentonite is a versatile mineral, with an ever-growing number of uses under its belt. Having struggled in recent years with rising freight costs, the high-bulk, low-cost mineral has bounced back in 2012 to increase its global presence in many important industries.

Bentonite is a clay mineral that expands, absorbing several times its dry mass, in water.

The mineral, sometimes referred to as fuller’s earth, is composed primarily of montmorillonite, a mineral of volcanic origin belonging to the smectite family. Montmorillonite is an aggregate of lamellar crystals, packed together by electrochemical forces.

Bentonite is mostly appreciated for its sorptive and thixotropic (water absorption, colloidal, waterproofing and binding) properties. Due to these varied, yet inimitable, properties the mineral is widely used in many different industries, including absorbents, foundry and oilfields.

Bentonite comes in two main varieties, each named after their most dominant element: calcium bentonite and the more commercially important sodium bentonite.

Sodium bentonite (termed sodium beneficiation or sodium activation) expands when added to water. As well as having many other uses, this swelling property makes the mineral useful as a sealant, lubricant, coolant, waterproof barrier and a viscosifier.

Calcium bentonite is a useful adsorbent of ions in solution, as well as fats and oils. The mineral is the main active ingredient of fuller’s earth, one of the earliest industrial cleaning agents. Calcium bentonite can be converted to sodium bentonite by a process known as ion exchange.





Bentonite market

As with many minerals, demand for bentonite is driven by end markets. This means that if an end industry is suffering due to the economic climate, the market for bentonite also suffers.

For the past few years, the bentonite market has been affected by the global economic recession, which has affected many companies across the board, including those working in foundry for automobiles, construction and housing.

Some minerals, for example potash, lithium and bromine, saw similar levels of production in 2010 as in 2008 despite sharp falls in 2009. In contrast, global production of bentonite fell by a further 5% in 2010 compared with 2009, in addition to reductions of 9% in the previous year.

Since 2010, the situation for bentonite has begun to recover, largely due to the improvements in its end markets. More than 11m tonnes of bentonite was produced worldwide in 2011, and global reserves remain in abundance, with proved reserves found to be more than 10bn tonnes worldwide, according to the US Geological Survey.

Reserves are mainly distributed between China, the US, the CIS, Germany, Italy, Japan, Greece, Brazil, India and Turkey. Most of this bentonite is of the calcium variety; global sodium bentonite reserves are thought to be fewer than 500m tonnes.

“The market for bentonite is mature and can be expected to grow in general relation to population growth. The market is also cyclical and demand follows the cycles of energy, housing or other major indices,” oilfield services leader Halliburton told IM.

While in the past few years this mineral has been hit by the global economic climate, it has also been affected by increasing transport costs. The mineral has faced difficulty in this area as its low price and high bulk often make it uneconomical to move long distances. Prices and sales have been altered accordingly (see table 3).





Bentonite in the oilfield

One of the end markets helping the bentonite bounce is the oilfields industry, which has grown significantly in 2012 as governments worldwide look for alternative energy sources. Many countries have now accepted the hydraulic fracturing (fracking) process, which is used to extract natural oil and gas from beneath Earth’s surface.

The fracking process utilises, in most cases, a mixture of water, silica sand (or other proppant variations) and a drilling fluid, such as bentonite. Bentonite is the second most-commonly used industrial mineral in drilling fluids, called muds, after barytes. Drilling fluids can be divided into three primary types: water-based, oil-based and synthetic. Bentonite is among the most popular of the water-based fluids, and accounts for around 70-80% of the drilling grade bentonite produced, and around 20% of overall bentonite demand.

Sodium bentonite has gained a stronghold in the oilfield market owing to its viscosifying characteristics and effective sealing and filtration properties. These properties come from bentonite’s structure as colloidal clay, comprising mainly montmorillonite, meaning the mineral expands when added to water.

Along with gel formation, bentonite’s role in the oilfield is principally to seal borehole walls and lubricate the cutting head. This is a small, yet vital, part of the oil drilling process, meaning bentonite’s consumption is directly linked to oil and gas exploration, and therefore demand.





Oilfield bentonite supply and demand

Oilfield rig numbers for 2012 so far show a slight dip on the counts taken during the corresponding period 12 months earlier, yet the overall trend is up on previous years. These rig counts, such as those published by oilfield service provider Baker Hughes, are telling barometers for the drilling industry and its mineral suppliers.

Rig counts back in 2010, just after the global economic downturn begun to bite, were averaging 2,985 globally. In contrast, for the first 10 months of 2012, rig counts have averaged 3,536, which is higher than in 2008, before the recession took hold.

While bentonite resources are abundant worldwide, the mineral’s use in oilfield drilling means that stringent requirements are specified by industry bodies such as the API and OCMA. These requirements often eliminate many of the potential deposits that could be a drilling bentonite source.

Despite these specifications, the crucial role of bentonite cannot be denied in the oilfields market and its presence is strengthened further by the fact that it has no close competitors.

“It is not foreseen [that there is] any significant substitution [for bentonite] from other materials; on the contrary, in the future bentonite might be able to substitute other materials, which have less flexibility than that of bentonite,” S&B Group, which dedicates 50% of its business to bentonite, told IM.

The lack of any clear substitutes for bentonite, and the promising rig counts reported by the industry, indicate a comfortable future for bentonite in this market.





Iron ore pelletisation

Another market where bentonite is widely used is in the pelletising of iron ore. Most pelletising plants consume this mineral as the main binder as it is low cost and does not detract from iron ore’s metallurgical behaviour. The mineral’s absorption properties act by filling the voids within the pellet matrix with a viscous gel.

In 2011, a total of 13% of the 4.9m tonnes of bentonite produced in the US - the world’s largest producer of the mineral - was used in the iron ore pelletisation process. However, while the iron ore market is beneficial to the demand for bentonite, this is yet another sector that has experienced a knock due to the continuing financial crisis.

Demand for iron ore has fallen as a result of weakened economies in China, the US and Europe, according to the Metal Bulletin Iron Ore Index, which also reveals that Brazil’s iron ore exports fell 8% year-on-year in September.

As a result of this slowdown, global iron ore leader Vale announced in October that it will suspend operations at three Brazilian iron ore pellet plants, one West African plant and increase the output of sinter feed. By suspending operations, Vale removes the capacity responsible for nearly a fifth of its pellet output seen in the first half of 2012, which could significantly impact the bentonite market.

“The company’s decision to shut down some of its pelletising facilities is a clear indication of the deterioration in the market for high-quality iron ore products,” Leonardo Correa, Pedro Grimaldi and Luiz Fornari, Barclay mining company analysts, wrote in a report to investors.

“This [operation suspension] is in response to the evolution of the composition of demand for raw materials by the steel industry during the economic cycle, which has shown a reduction in demand for pellets,” a Vale company statement said.

The market for bentonite in iron ore pelletisation is expected to improve as we move towards 2013. Positive data from iron ore miners helped fuel the dry bulk shipping rally in October 2012, while Rio Tinto’s global iron ore production rose 5% in the fourth quarter to 67m tonnes. The company expects to produce around a further 250m tonnes from its operations in Australia and Canada this year, although this could depend on the weather.

Rival Australian iron ore miner Fortescue Metals also reported a 30% year-on-year increase in shipments in Q4. Total production was 16.1m tonnes in the latest quarter compared with 12.4m tonnes in the corresponding period last year and 17.8m tonnes in the prior quarter. Fortescue also forecast iron ore output to hit 36m tonnes in the next two quarters.

Bentonite pricing

Bentonite pricing is, as expected, largely influenced by end-market factors. Both the global economic slowdown and increasing transportation costs are having an effect on bentonite supply and demand, as well as pricing.

“Along with other minerals, bentonite faces considerable cost pressures due to rising energy and freight costs,” S&B Group told IM.

“Furthermore, the high demand for the mineral required the use of a large exploration programme into [difficult] mining areas, which also created a considerable cost increase of the material. As a result, bentonite prices increased considerably this year more than 8%, and are expected to increase further next year [allowing] the producers to be able to cover, at least partially, the increased costs,” the group added.

These pressures could cause bentonite prices to increase by as much as 20% by the end of this year, one industry source told IM. The market has enjoyed high demand for the past year as oil and gas exploration has risen which has led to an increase in need for the oilfield mineral.

Market sources agree that they expected prices to rise by between 10-20% in 2012 for US bentonite.

“This seems high, but I know bentonite producers have been having a hard time keeping ahead of cost increases,” one source said.

Bentonite in the US is mainly produced in Wyoming, where a number large producers operate, and supply is increasingly tight.

Several new producers are expected to start up operations in Wyoming in 2012/13 to take advantage of the expected price rise. Wyo-Ben Inc. announced in September its intention to restart operations at its Meeteetse Draw mine in the area and US Bentonite is rumoured to be ready to expand operations from 1 February 2013.

Greek bentonite prices are also expected to increase, albeit at a more conservative rate.

The market source said he expected grades to be raised by around 6%. Greek prices currently stand at between €65-75/tonne (482-95) FOB (dried materials in bulk).

Although it was unable to disclose its prices, Italian bentonite producer Sipag Bisalta SpA told IM that prices are different for each application due to:

- Bentonite quality;

- Production cost (micronised products, granular products and so forth);

- R&D cost;

- Technical assistance for customer; and

- Market (competition).

“Usually, prices for specialties [feedstuff, spa mud therapy, water treatment, paper, ceramics, agriculture and winemaking], are higher than civil engineering bentonite. The foundry market has medium level prices,” Sipag Bisalta told IM.

Cat litter

One sodium bentonite end market that has been particularly affected by price increases in 2012 is cat litter, which utilises the mineral due to its absorbent properties. In the US, more than 900,000 tonnes of bentonite was sold or used in the pet litter industry in 2010.

However, due to the increased transport costs experienced across many bentonite end markets, prices for cat litter were increased throughout 2012.

Oil-Dri Corp. is an example of this, as the company increased prices on all grades of coarse and scoopable cat litter in August this year. The US-based company blamed severely increased transport costs as the main contributor to the price rises and will use the increased income to “recover a portion of the margin it has lost during the past year”, it said.

“[Efforts to control cost rises] have been dwarfed by the continuous and increasing rise in transportation costs and other purchased items,” Daniel Jaffee, Oil-Dri CEO, said.

Oil-Dri produces bentonite and then processes it into cat litter at its manufacturing facilities in the US and Canada.

The future for bentonite

While it is clear that bentonite has had a rough couple of years coping with the impact of the global recession and increased transportation costs, the future looks bright.

Many companies are ploughing ahead with bentonite production for the main end markets they are currently working in, while others are looking to expand production for new markets, which have yet to be explored.

“We are involved in the further diversification in bentonite applications and in the extension of regional presence by technology transfer,” S&B Group told IM.

“A special attention was given to new products which are linked to environmental benefits and recycling possibilities. In the drilling market, a new product has been formulated, which meets highly demanding drilling conditions,” the company added.

Meanwhile, Halliburton told IM that it is moving ahead with its drilling activities as the oilfield market continues to grow.

“In addition to bentonite’s use as a drilling fluid additive, Halliburton will continue to explore new opportunities and activities as they are presented or conceptualised,” the company told IM.

Sipag Bisalta also plans to be busy in 2013, and is expanding its range of bentonite products with chemicals in the civil engineering industry, while also concentrating on new business outside Italy, the company told IM.

So, as the world moves out of the global recession and looks forward to growing business opportunities, it seems that the bentonite market will also continue to swell.

Bentonite end uses

Sodium bentonite is a mineral with many end uses and applications but few comparable substitutes. Below is a list of just a few of bentonite’s most common applications:

FOUNDRY

Bentonite is used in metal casting as an inorganic bonding material. The mineral’s ability to swell and induce viscosity enables sand moulds to flow at a manageable rate, compact and have thermal stability. Bentonite’s vitrification temperature is also higher than many other clays, meaning that when used as an additive in foundry applications, it makes sand more durable, and, in particular, more resistant to heat stress.

CIVIL ENGINEERING

Bentonite is used in civil engineering as a support fluid in deep foundation construction due to its viscous properties. Bentonite is also used as a colloidal additive in cement slurries, to seal off soil infiltrations and to line the base of landfills.

FEEDS

Bentonite can be used as an animal feed supplement and, under European regulations, the mineral is actually classified as a food additive, with E number E558. Due to its adsorption properties, bentonite is used as a pelletising aid in the production of animal feed pellets. It is also able to protect against micotoxins.

WATER TREATMENT

Due to its ion exchange, flocculation, and sedimentation properties, bentonite is used in environmental protection for water clarification and sludge treatment (see pp. 66-70).

CERAMICS

Bentonite is used to lend plasticity to the ceramic paste necessary to ensure good tenacity. Bentonites are selected depending on their use, for normal mixtures, or white paste, for engobes or enamels.

AGRICULTURE

In agriculture, bentonite can be mixed with pesticides and fungicides as a support-carrier to ensure the substance sticks to the target. The mineral can also be used in organic farming, replacing man-made chemical substances that are used to inhibit fungi and parasites. This process is widely used in the biodynamic cultivation of wine grapes, where bentonite is mixed with other elements to fight oidium.

In liquid and solid fertilisers, bentonite is used as a fixing carrier and to control the release of nitrogen, potassium, and phosphorus. The mineral also contributes to sludge and manure dehydration and agglomeration.

CAT LITTER

Due to its absorption properties, bentonite is a vital ingredient in pet litter. There are two main types of bentonite cat litter: coarse and scoop-able.

OILWELL DRILLING

Bentonite is the second-most-commonly used industrial mineral in drilling fluids after barytes. The average drilling mud or fluid may consist of bentonite clay carried in water, diesel or mineral oil. Bentonite performs several purposes by cooling down the bit, tubing and the rig itself, while also stabilising the drill hole, increasing the viscosity of the mud, allowing it to carry rock cuttings to the surface effectively.

Bentonite also forms a low-permeability filter cake on the wall of the drilled borehole that prevents the circulating mud from escaping through the adjacent formations. When mixed with water, bentonite disperses to form a colloidal suspension that sets as a thixotropic gel at concentrations of 1-2% by weight, thus providing the required viscosity. Bentonite specifications for use in drilling muds evolved through two organisations: the American Petroleum Institute (API) and the Oil Companies Materials Association (OCMA).

IRON ORE PELLETISATION

Bentonite is widely used in pelletising of iron ore due to its high temperature resistance and its ability to not react with the ore. Most pelletising plants consume this mineral as the main binder as it is low cost and does not detract from iron ore’s metallurgical behaviour. The mineral’s absorption properties act by filling the voids within the pellet matrix with a viscous gel.